Budgeting at 20: Why and How to Get Started

With the right framework and the right tools, taking control of your money is easy. Here’s how to start budgeting in your 20s.

You are finally financially independent. You can spend your money For the things you want, that’s exciting. But with this freedom come more serious issues, such as:

  • Do I spend a lot in a month?
  • Am I doing things right?
  • Should I save?
  • Should I feel guilty every time I buy a fancy cocktail?

Budgeting helps answer these questions and more. Believe it or not, giving you a financial framework actually gives you more flexibility, more money to spend, and less to worry about.

Budgeting at 20: Why and How to Get Started
Budgeting at 20: Why and How to Get Started

Why you should start budgeting when you’re 20

Saving early means getting more out of every dollar

It doesn’t matter how much you get paid. The more Start saving earlyYou will earn more later. This is due to what is called compound interest.

The idea is this: When you invest your money early, you not only earn interest on that investment, but over time you also earn interest on your interest. The longer you allow your investment to grow, the more you will benefit from every euro.

Here’s a simple example:

At 22, Thibault invests 200 euros in a UCITS which offers a 5% return with a online broker like IQ Option. He continues to invest €200 per month, and when he turns 65, his investment earns him €363,945.99.

Let’s compare this situation with that of Yannis, who follows the same investment plan, but starts at the age of 30. When Yannis turned 65, his investment was worth only €228,365.23. Thibault’s meager eight years at Llanes earned him an extra €135,580.76.

The key is to give your money time to build up interest. It doesn’t have to be a good start. Just never.

A budget prepares you for your future adult life

Don’t start saving for a home when you want to to buy a house. You may not be thinking about diapers and home ownership yet, but you might think about that later.

By starting to save early, you give yourself the means to ease the financial burden that will weigh on you when the time comes. It’s also important to know how to stick to a budget so you’ll be prepared when your finances get a little more complicated.

Treat yourself to the lifestyle you want today

Your twenties are the best time to do whatever you want while still being young and without big responsibilities. With a spending plan, you will be amazed at how much you can extract from your income.

Tracking your spending helps you identify areas for improvement so that you can spend less on things you don’t need and use that money on something better. Like that trip to Spain I thought of.

Get out of debt faster

Get rid of debt anxiety that threatens you for good. Budgets make it easier to pay off your debts without affecting your paycheck. By getting in the habit of saving a little each month, you can Get rid of your debt faster.

Less stress about unexpected expenses

Life consists of the unexpected. It could be a dentist appointment, car trouble, or a roof leak—you know what I mean. Budgets ensure that there is always extra money to deal with these contingencies.

You shouldn’t waste money borrowing at high interest rates or making embarrassing complaints to your parents or friends. Nobody wants to see that.

How do you start budgeting?

Budgeting is important, but it doesn’t have to be complicated. Start building your budget by following these six simple steps.

Determine your monthly income

Collect all your Sources of income in one place. What is your monthly income after taxes?

  • If you get paid every two weeks, multiply your salary by 2.166.
  • If you are paid weekly: multiply your salary by 4.333.
  • If your income is fluctuating: You can average several months of income. Try to be as careful as possible.

Track and classify your average monthly expenses

Keep it simple. Start with your total expenses for the last month. Collect all your bills and receipts and calculate your monthly expenses.

Divide your expenses into categories that work for you. For example: living expenses, transportation, subscriptions (such as Spotify or Netflix), groceries, medical expenses, debt payments, and entertainment. This helps identify unexpected areas that can lead to losing money.

Set a goal

Getting on the right financial track is a great goal, but it’s important to work toward something tangible. This motivates us to be diligent and consistent in our budget.

What if I don’t have a goal? make one. A good first goal is to create a emergency fund for unexpected expenses.

Here are some other potential targets:

  • Short term goals: Save up for a new sofa or sofa.
  • Medium term goals: Save for one carGet rid of debt.
  • Long term goals: Save to retirement or Pay off your mortgage.

Define your financial framework

Start by comparing your expenses to your monthly net income. What is your skill? What are your goals? What categories of spending can be optimized?

Start setting ideal budget goals for each category. Be true to yourself and your lifestyle. If you like to go out to dinner, include that in your budget as well.

modify. repeats.

Don’t forget that our consumption habits and incomes are changing. Make sure to adjust your budget accordingly. Also, make sure your budget is sustainable. If you find it difficult to stay within this framework, change it. Get real with yourself.

Budgeting Resources: What can I do to make budgeting work for me?

Put together this Excel spreadsheet for dummies. There are tons of resources for every type of budget, whether you want to do it yourself or have it done by a pro.

Experiment as you like until you find what works for you. Remember that what matters is what’s best for you.

The 50-30-20 budget method

The 50-30-20 method A good starting point for beginners on a budget. Avoid complex expense categories.

Simply divide your budget into three parts: 50% for living and basic expenses (rent, groceries, utilities), 30% for lifestyle expenses (entertainment, dining out, travel), and 20% for your financial goals (savings, paying down debt and investments).

Instead of giving up your social life, the 50-30-20 rule gives you 30% of your budget to spend as you see fit.

It is good for:

  • Budget starters.
  • People who want flexibility in budget.

envelope method

envelope method It is as follows: You store your budget in the form of cash in envelopes designated for each category of spending. This is a rather old method, but it’s a great option for people who like to set stricter limits.

It is good for:

  • Those who prefer to use monetary instead of Credit card or discount.
  • People who need more financial limits.

bullet notebooks

Bullet journals have become a very popular way to organize your life and keep track of your tasks and goals. It is now used as a budgeting tool.

Bullet Notebooks are highly organized and personalized journals that you update regularly. Writing goals or reminders can carry more weight than just writing them down or relying passively on an app.

It is good for:

  • People who like to physically write their assignments.
  • People who want total control of their budget.

How to use credit cards on a budget

It can be difficult to keep track of and list all of your expenses, but fortunately, most credit cards take care of that automatically. Credit cards are a great budgeting tool.

It allows you to keep track of your expenses continuously and categorize them into different categories. Plus, you can stretch your budget even further by earning rewards for every dollar you spend.

revolution card

Think of a credit card revolution. It’s a great card for medium credit and you can still get 1% cash back on all your purchases.

Single card tracking

A great option for beginners and experts alike is to limit your purchases to a single payment source.

This solution has many advantages, but it can be especially useful if you’re struggling to manage all your bills, credit cards, and debit cards. Instead, you only have one card to manage. You can also reduce the number of bills you have to think about each month.

Most credit and debit cards have built-in tracking systems that organize your spending into charts. With just one card, you can use these services as intended, without having to merge data from other cards. And if you use a credit card as your primary payment method, you’ll earn rewards faster.

It’s a good thing:

  • People who find it difficult to manage several different payment methods.
  • People who want simpler finances.
  • People who care about getting rewards.


This list only scratches the surface of the many financial tools designed to help you succeed. With the right framework and the right tools, it’s easy to take control of your money. This means less hassle and more money for the things you want. It goes without saying. So what are you waiting for?